Vodafone pummels UK FTSE on payout disappointment
* FTSE 100 down 0.3 pct to 6,485.90 pts
* Vodafone falls as terms of joint venture sale fuel profit taking
* Miners and HSBC higher on Chinese data boost
By Francesco Canepa
LONDON, Sept 3 (Reuters) - Britain's top share index traded lower on Tuesday, weighed down by Vodafone after the terms of the telecoms giant's sale of its U.S. mobile stake to U.S. partner Verizon disappointed some investors.
Vodafone, Britain's fifth largest stock in terms of market capitalisation, fell 4.8 percent, giving back over a third of its rise since Thursday. It knocked 19.3 points off the FTSE 100 , which traded 20.3 points lower, or 0.3 percent, at 6,485.90 points.
While the telecoms firm said the deal with Verizon would allow it to return $84 billion of the net proceeds of the deal to shareholders, the division of that payout between shares and cash is capped.
"The cash element of the payout is probably less than expected," Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said.
"For shareholders there is also the strange situation that, while Vodafone has cut ties with Verizon, they (the investors) haven't, so some of the institutional shareholders could be taking this early opportunity (to cash in), especially if they can't hold U.S. stocks in their portfolio."
Simon Maughan, strategist at Olivetree calculates the payout structure means Vodafone shareholders will not benefit from any strength in Verizon's shares until the stock has rallied 7.6 percent, while they wear most of the potential downside.
Beyond this, stocks exposed to China such as miners and bank HSBC were among the top gainers, after China's services sector grew steadily in August as domestic demand picked up, official data showed on Tuesday.
Volume on the FTSE was thin at 78 percent of its average for the past three months, with Vodafone a notable exception at 2-1/2 times its volume average.
"With Chinese data encouraging, we remain optimistic for the market in terms of absolute growth," said Atif Latif, director at Guardian stockbrokers, who expected the FTSE to push to 6,875 points, a high tested in May and previously seen in 1999. (Reporting By Francesco Canepa Editing by Jeremy Gaunt.)